US budget, tax battle -- new tactics emerge

October 13, 1981

By Godfrey Sperling Jr.Staff correspondent of The Christian Science Monitor

Washington

A delay in next year's tax cuts now looms as a distinct possibility. Republicans now are joining their colleagues in Congress in calling for a postponement of the second installment of the three-year, 25 percent tax reduction. That second installment, a 10 percent cut, is scheduled for next July 1.

The deferment would push the cuts ahead to October 1982 or later.

Furthermore, the White House is showing some signs of being willing to at least listen to such a proposal.

"We are looking at all alternatives," an administration official says of President Reagan's position with regard to alternatives to the additional budget cuts he has proposed.

"We are unwilling to send out signals [in] any way on this," this presidential aide said in discussing whether the tax-cut deferral proposal might be found acceptable by Mr. Reagan. "The President," he said, "is saying to Congress, 'Let's have a dialogue -- let's listen to whatever alternatives you may have.'"

The administration, meanwhile, has settled on some deferrals much more to its liking. In hot pursuit of a balanced federal budget, the President is planning to defer spending during the next month on a wide range of domestic programs. The savings are expected to total some $1 billion.

These deferrals are possible under a provision of the "continuing resolution" which took effect when Congress failed to pass major appropriations legislation by the start of the new fiscal year, Oct. 1.

Concerning the possibility of postponing the Reagan tax cuts, much of the growing congressional support for such a move comes from those who feel that this is the only route that can be taken without making unnecessarily deep cuts in social programs.

Sen. Bob Dole (R) of Kansas, chairman of the Senate Finance Committee, recently told a group of reporters that congressional support for tax-cut delay was "substantial."

He said that he had made his position on this clear to top figures in the White House. He said he had told them: "You guys better get on with it or you are going to have a problem on your hands."

Earlier Sen. Gary Hart (D) of Colorado had told this same group that he was noting growing bipartisan backing in Congress for delay of the second installment of the 25 percent tax rate cut.

One White House official said the President would be "powerfully disposed" not to go along with tax-cut delay.

But the prospect seems to be growing here that the President just might accept tax delay, although very reluctantly, if the overall alternative budget-cut package presented to him by Congress is acceptable to him.

Also, there is the possibility now that the President might be presented with new budget legislation that may include tax-cut delay provisions -- even if he continues to oppose such a change. The question then: Would he veto it?

The answer from the White House was noncommital on this, which at least opens the door to the surmise that if the President thought the entire alternative package was the best he could get out of Congress, he might let the legislation go into effect while, at the same time, expressing displeasure over the tax-cut delay.

Using its strategy of deferring spending under the continuing resolution, the administration hopes to make cuts of 12 percent from current funding in most programs outside of defense. These cuts would come in the 50 days between Oct. 1 and Nov. 20, when a second continuing resolution may be necessary.

The funding deferrals, ordered by the President's Office of Management and Budget, can be overridden by either the Senate or the House.